Employee Duty of Loyalty

In running a business there is often the question of what to do where an employee or past employee intends setting up business in competition to their employer.

What can be done?

In New Zealand, courts have determined that an employee is “bound to serve his employer in good faith and fidelity”. The duties of an employee should be set out in their employment agreement. We recommend that all employment agreements:

* Require employees to act faithfully and in the best interest of the company, including passing on all relevant business information and potential opportunities, and

* are relevant, in that they record any changes to conditions or altered/expanded expectations placed upon the employee.